Thank you for standing by. This is the conference operator. Welcome to the Endeavour Silver Corp. Full Year 2023 Financial Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Galina Meleger, Vice President of Investor Relations. Please go ahead.

Thank you, operator, and good day, everyone. Before we get started, I ask that you view our MD&A for cautionary language regarding forward-looking statements and the risk factors pertaining to these statements. Our MD&A and financial statements are available on our website at www.edrsilver.com. With us on today's call is Dan Dickson, Endeavour Silver's CEO as well as Elizabeth Senez, our Chief Financial Officer; and Don Gray, Endeavour's COO. Following Dan's remarks, we will then open up the call for questions. And now over to Dan.

Thank you, Galina, and welcome, everyone. As we commence this year's earnings call, I think it's important to acknowledge the dynamic landscape that shaped the mining sector in 2023. Roller coaster market forces led to volatile and lower equity prices. These events negatively impacted company valuations across the precious metal sector, creating a significant disconnect from the underlying commodity prices. But this broad market backdrop, we navigated higher operating costs, adding complexity to our operations. This theme was apparent for all Mexican mining firms, which saw cost pressures across multiple channels. To put this into perspective, I'll provide some key data points. Over the last three years, the Mexican consumer price index surged by more than 21% and was amplified within our industry as key inputs such as steel, reagents and other consumables were impacted by supply constraints. Furthermore, from Q4 2021 to Q4 2023, the Mexican peso strengthened by nearly 20% against the US dollar had cascading effects on our in-country purchases and labor costs. As I look back on the year, I can affirm that our operations team displayed unwavering dedication in navigating these challenges. Today I don't want to just reflect on these challenges, but to emphasize the strategic initiatives we've implemented to ensure the growth and success of our company. On a consolidated basis this year, we produced 8.7 million silver ounces equivalent metal, which met guidance after two consecutive years of exceeding production guidance. Production was near the lower end of the guidance range with a production shortfall in Q3, largely due to mine re-sequencing changes, we implemented to improve ventilation and ultimately worker safety. This temporary disruption in operations results in a reduced mine output and ore grades. I'm please to say Guanacevi's performance improved significantly in the fourth quarter as the planned improvements…

Certainly. [Operator Instructions] the first question comes from Jake Sekelsky with Alliance Global Partners. Please go ahead.

Hey, Dan and Team, thanks for taking my questions.

Hey, Jake, how are you?

Well, well, how are you? So just starting with ASIC guidance for the year, can you speak to or maybe quantify the positive impact that the recent move in the gold price might have from a gold credit perspective?

Yes. Well, for the year, just for all the listeners, we'll produce about 5 million ounces of silver and about 35,000 ounces of gold. Obviously, $100 impact on increase in the price of gold has a significant impact from a byproduct standpoint. We did our budgeting, I believe, at 1840 for the year on gold. And obviously, today, we're sitting around just shy of 2200. That impact will, first of all, significantly drives down on a per ounce basis byproduct basis. Specifically, when it goes right into our cash costs and where our guidance was, it's beneficial, but I think it's still early days, and we'll stick by our guidance of using 1840.

Okay. That's helpful. And then just at Terronera, can you just touch on the remaining exposure from a CapEx standpoint to broader inflationary pressures? And what else as long as you locked in then?

Yes. I think at this point, Jake, the inflationary pressures is probably taken away just the fact that we've done most of our key procurement even on bulk items now. When we reestimated the price of Terronera, the initial CapEx going from $230 million to $270 million, we adjusted our Mexican FX rate to 17.3% in our budget. And so as long as the Mexican FX rate stays there, I think, we'll be all right. Now it just comes down to productivity at site and making sure we execute. Again, there's always going to be small headwinds, whether it's inflationary or if the peso continues to appreciate but the impact and what's left to build over the next kind of nine months is small as long as we produce.

Got it. Okay. That's all for me. Thanks again.

The next question comes from Heiko Ihle with H.C. Wainright. Please go ahead.

Hey, Heiko, hopefully, your question comes through. You sound a little digitized at this time. Apologies, Heiko, from our end we couldn't get what you're saying, everything's come through digitalized. Operator, if we can maybe go to the next question and put Heiko back in queue, if possible.

Certainly, the next question comes from Lucas Pipes with B. Riley Securities. Please go ahead.

Thank you very much, operator. Good morning, everyone.

Good morning, Lucas.

I'll try not to sound like R2-D2, but first, I wanted to add my congrats to Elizabeth and then Christine, I hope you enjoy retirement. Dan, maybe a first question on the cost side. What else can be done? What else are you looking at to mitigate costs kind of going forward? Would appreciate your thoughts. Thank you.

Yes. Guanacevi, we still have opportunity for productivity. So in Q3, we had ventilation issues that made it extremely warm for our employees to work underground. And as we got deeper into the El Curso area, it got hotter. And in Q4 -- Q3 and Q4, we put through a new ventilation system and ultimately increase our pumping of the water that was coming out. We got a lot of benefit of that in Q4, but there's still some benefit to come in Q1, and that just comes down to productivity. So when the mine got overly hard, we had to give more breaks to our employees and put them in cooling chambers to effectively make sure that they're operating in a safe manner. And I think at this point in time, with the ventilation and where the temperature is underground, they can work fully. And so there's productivity gains that could be gained at Guanacevi and then it's working across both Bolanitos and Guanacevi and making sure we're procuring and going out to a number of different vendors and trying to get some bulk work done on that. And there's always abilities to kind of look at what we're doing from a purchasing standpoint, what we're doing from a productivity standpoint. Making sure that ultimately, our mine development is a big focus this year that we are getting our advance rate as expected and putting some incentives to make sure that we're doing that as a group. So there's a lot of little things that we can do. Obviously, there are mature assets at Guanacevi and Bolanitos and this kind of diminishing returns over the years. But I think with where -- what we've seen in Mexico with regards to all those cost pressures that we have to look at, anything that's available to us to try to reduce our costs on a per tonne basis.

Thank you for that. And switching over to Terronera. What does the workforce stand today? And what's kind of your employee count versus which is contractor labor. I think you've mentioned that as kind of a -- kind of key driver of productivity and efficiency going forward. And then in terms of the ball mill, has that been transported to the plant yet? Or is that expected in Q1?

Yes. No, for sure. To answer the first question. So at December 31st, we were 520 total employees and contractors of that 520, about 120 were direct employees. Through this year, we do expect to peak around 700 on-site and then with regards to our ball mill, it's a good question. I mean, I touched a lot on Q4 and what was happening at site. Our bill -- our SAG mill and our ball mill actually already at site, and they have been placed. So it's been an exciting kind of Q1, but we'll have a full update of Q1 generally in April from a construction standpoint.

All right. Well, I really appreciate it. I'll turn it over. Best of luck.

Thank you, Lucas.

The next question comes from Stephen Soock with Stifel. Please go ahead.

Hi, Dan and team, congrats on a good quarter. My question is just more on Terronera and the underground rates. I think this was kind of a critical path item and great to hear they've come up so notably over the last quarter. Can you just comment on if those are tracking to your original plan or is there a catch-up to do there or are you seeing additional efficiencies that you hadn't counted on at this point in the transition and just a little more color around how that's progressing? Thanks.

Yes. It's a very good question, Stephen. And our plans ultimately is about four meters of advanced per critical heading per day. We were able to achieve that in Q4, and we've seen that in Q1. There's always a little bit of opportunity with the redesigning of our mine plan. We continually redesign our mine plan. I'd almost call it dynamic just based on ground conditions, water flow, a number of things that we've done. We've got a very seasoned team on site, and they've been phenomenal, I would say, over the last six months. So we are hitting our advance rate as planned to make sure we're in commissioning for Q4 of this year.

Perfect. Great to hear. That's it for me. I appreciate it.

Thanks, Stephen.

The next question comes from Craig Hutchison with TD Securities. Please go ahead.

Hi. Good morning, guys. Thanks for taking my questions.

Good morning, Craig.

Good morning, Dan. Maybe a similar question to Stephen just with regards to critical items. You guys mentioned the Tailings Storage Facilities on the critical path. Any updates on kind of where that stands? And you did mention that you're going to provide an update in Q1, but any kind of numbers you can kind of give us in terms of where the overall project sits here in mid-March, 43% at year-end kind of where are you in the 50s now and anything on that would be helpful? Thanks.

Yes. You're correct. And maybe to kind of expand on Stephen's question. Right now, we see the critical path being mine development and the Tailings Storage Facility and probably the Tailings Storage Facility originally on outside of the build wasn't expected to be a critical path item, but just on timing of when we got started on that lower platform and where the tailings dam is. It's right there with mine development. I'm happy to say that in Q1, all our work has begun on the TSF, with the expectation that, that work will be done midyear. So there's still some time around it. Again, productivity around the TSF starts off a little bit slow, but it's picked up. And hopefully, we can make it. So it's no longer a critical path item, and it remains to be the mine development.

Okay. And just overall progress, any updates on the sort of 43% year-end?

Yes. Like I say, we originally thought 46 and we adjusted it to the updated initial CapEx. And right now, at December 31st, we felt we were about 43. Generally, we're adding 2% to 3% of efficiencies per month, and that's generally the plan. So we're probably sitting at the beginning of March, not mid-March year, but around 50%. I know Don Gray is on our line, our COO. Don, would you have any other color you'd like to add to that?

Yes. Thanks, Dan. So Craig, we're just under 50% and we'll have the -- we'll have better visibility on that at the end of March. But things are moving really well at site. A lot of work going on the mechanical and the upper platform. Like Dan said, we've set the mills and also starting to set pumps and flotation cells and things like that. So and the excavation is going well down on the lower platform area.

Okay. Great. Maybe one last question for me. Just -- you guys are planning to go down the debt facility this quarter. Is that still on track? Will it be the full amount or will it be sort of increments of the full amount?

I'll take that one. This is Libby Senez. We are planning to draw down the first draw this month, but not the full amount.

Okay. Thanks guys.

Thanks Craig.

[Operator Instructions] The next question comes from Heiko Ihle with H.C. Wainwright. Please go ahead.

Can you guys hear me okay?

You sound phenomenal, Heiko.

I'm in my house. I don't know what happened earlier. So I hung up and dialed back in. So if this question was asked, my apologies in advance. Dan, earlier on this call in your prepared remarks, you mentioned early Q4 for commissioning, reading into this, we're looking probably at October or maybe early November, so seven months away. Has that time line changed at all? I just went through the February 12 press release and it also just states Q4. And I mean we probably had more like mid Q4 in our model, and this is obviously quite a bit better. And if this time line has changed, what exactly helped moving forward please.

Heiko, we've always publicly said that we are Q4 commissioning, and we've never indicated whether that was going to be October, November, December. And I think that buys us a little bit of time and we initially had planned in our feasibility study kind of a three to six month commissioning phase. And in our model right now, maybe it's a little bit shorter than the six months and closer to that three months. But the expectation at the outset since April 2023 until today, as we've publicly been saying it's a Q4 commissioning for 2024.

Got it. Okay. Building on that, and just thinking a lot here, the cost curve for Terronera, obviously, has sort of ramp-up associated with it. In your internal model, has anything with this ramp-up curve changed compared to where you maybe were a year or two ago before it really started getting fully built?

Maybe I'm not fully understanding your question. So with the ramp-up of the initial CapEx going from $230 million to $270 million, you're asking about the impact on our model?

No, no, once it's actually in production later this year with -- I assume as efficiencies at site get added within two, three, four quarters as the whole thing ramps up. Anything you're seeing anything that changed internally over the past couple of months and what you're seeing in the cost for the ramp-up?

To be honest.

Like the cost per ounce.

Yes. We haven't come out publicly and from an internal standpoint on operating costs. So clearly, from our existing operations, we've seen operating cost pressures increased because of the Mexican peso because of the inflation rate. Publicly in our feasibility study, we put out an $87 cost per tonne on the operation. Again, that was at the 1,750 tonne per day. When we announced the construction decision for Terronera, we talked about the 2,000 tonne per day scenario, which brought our cost per tonne down to 80. Now clearly, with the pressures that we've seen across the space, that $80 per tonne probably not going to be $80 per tonne increase in steel prices increase and reagents is going to push that up. We haven't remodeled all that. As we approach operations and going into commercial production, we'll probably update the market at that time with regards to those. But just knowing the operations and where those pressures have been, I don't think it will be significant or change the outcome of what we do at Terronera.

Perfect. That's fair. Apologies for the bad connection again and I'll talk to you soon.

Thank you. No apologies necessary.

This concludes the question-and-answer session. I would like to turn the conference back over to Dan Dickson for any closing remarks.

Well, thanks, operator, and thanks for everybody attending this year's 2023 earnings call. Hopefully 2024 turns out to be a wonderful year. I know in the last two weeks, we've had a real push on gold prices, and hopefully, that translates into the silver price. I know we're still sitting close to 9:1 ratio. And ultimately, we see some love in the gold price that will translate over to the silver price. It's our job to execute this year on Terronera. I think we'll have a very wonderful 2024 and hopefully beyond that. Thank you, and have a good day.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.